S&P
The First Trade… Legs, again?
Proper context can start the day with a solid win and make all the difference.
CHARTROOM LINK(s)
o Win XP-Friendly entry
o non-xp friendly (ilinc)
(pre-open Market Tour begins at 8:55 ET)
Through the prior close…
Despite an overnight rally, despite gapping up, and despite triggering bias-up, Wednesday morning ranged sideways, supported by its 2090.75 bias-up signal. That launched a decline which expended a lot of selling pressure during the weak-handed noon hour window, touching the afternoon”s 2080.00 bias-down signal”s support. So, optimistic buyers had been retrained and then weak-handed buyers had been expended. The afternoon”s FOMC statement easily surged to fresh highs at 2098.50, dipping into the close back down to 2091.25.
Overnight action”s new info…
A late sell signal had triggered under 2093.00, targeting 2085.00 or 2082.00. Both were met. In fact, 2082.00 was touched by a blip-down that spiked back up into a rally back to 2093.00. Its reaction was recovered back up to 2096.50, which is reacting back down now to 2093.00.
If, then…
Yesterday”s pre-open and post-open optimism had only one bullish effect — it allowed a lot of selling pressure to be expended without damaging the chart. Yesterday”s FOMC reaction seems to have had that reaction, too. But that may depend on restraining optimism before the open. Gapping up would be vulnerable to repeating yesterday”s pattern of reacting down deeply. Yesterday afternoon”s 2098.50 high printed too late to form a reliable “session-long rally” setup, but it would be credible. Just getting through 2100.00 can make the difference between pointing to new highs, or else retesting yesterday”s lows.
First Trade…
Exiting the open at 9:45 above 2096.50 would be likely also to trigger the 2095.25 bias-up signal at 10:15. Exiting the open under 2091.00 would be unlikely to trigger bias-up.
Wednesday”s FOMC statement was greeted
Wednesday”s FOMC statement was greeted by a deep sell-off. It had originated from a bias-up environment, developing during the otherwise noisy noon hour, touching the afternoon”s bias-down signal without triggering it. Extending any lower would have extended down a lot, because that would have required new sponsorship. Instead, all available selling pressure had been expended. Retesting the low”s oversold RSIs allowed allowed a probe of fresh highs.
Now, have the tables turned? A lot of buying pressure has been expended, it has been very productive, and it was expended largely during the weak-handed environment of a news reaction. Perhaps the tables have been put in storage — the WedEX signal didn”t trigger, so trending into and out of the weekend isn”t yet signaled.
The pattern is vulnerable to resuming Wednesday”s post-open decline. Almost any delay in rallying Thursday above 2095 or from 2085 support would be likely at least to probe under Wednesday”s 2080 low. There is no assurance of recovering from fresh lows. But rallying would likely find little resistance until probing well above 2100, and then only temporarily on the way to new highs.
Here”s more details in the post-market Wrap recording:
https://roddavid10.mitel-nhwc.com/join/cxwzbcy
[Links to view overnight action will be added to this post”s comments section in the Activity Feed]
Morning bias
| THU morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2103.75 | 2095.25 |
| …would target | 2109.00 | 2100.50 |
| Bias-down: under | 2093.50 | 2085.00 |
| …would target | 2087.00 | 2078.50 |
| Signal status: BIAS-UP, BIAS-UP TARGET EXCEEDED | FAQ | |
| INTRO VIDEOS #1 and #2 | ||
1. At 10:15, trading above the bias-up signal or under the bias-down signal would put into play a test of its bias-up or bias-down target.
2. Not triggering either bias signal at 10:15 would be “no-bias,” and the bias signals should define the bias environment”s range.
— A test of the opposite bias signal would be targeted if one bias signal was tested before triggering no-bias.
3. Touching the bias signal within 3 minutes either way of 10:15 would invoke a grace period through 10:30 to trigger a late signal.
— “Late” signals don”t require testing the opposite bias signal, but it”s still likely.
4. Still testing the bias signal at 10:30 after invoking the grace period would trigger “noN-bias,” with no bias influence.
Pre-close view… That WAS the kitchen sink.
Pre-news drop produces recovery to fresh highs.
One thing prevented getting too bullish ahead of Wednesday afternoon”s FOMC statement: oversold RSIs at the 2080.00 low. That one thing, and the lack of anything outright bullish. But at least two relevant conditions were potentially bullish.
First, the intraday pullback had developed exclusively since the morning”s bias environment began lapsing, and extended substantially during the noon hour”s noise. That”s not necessarily strong-handed sponsorship, leaving potential for the dip to be defensive posturing.
Second, the 2080.00 low was the afternoon”s bias-down signal. That”s literally as much selling pressure as could be expended without gaining traction.
The FOMC statement”s knee-jerk reaction spiked down to neutralize the low”s oversold RSIs down to 2078.75. Then it recovered to 2094.00. Its reaction to 2085.50 was recovered to 2098.75.
Until dropping back down to 2084.50, having absorbed so much selling pressure last week and since Wednesday”s open, there remains potential for a relief rally. Fresh highs in the 2100.00 area offer resistance, but probing any higher would likely find an air pocket above it.
Daily Spot… Hut, hut, not yet.
A daily summary of high-profile members of several complexes… View a more detailed discussion of each chart at the end of today”s Market Wrap.
Eurodollar Jun Contract (EC, ETF: (FXE, UUP))
Days of narrow ranging finally broke higher, needing the FOMC policy statement as a catalyst. Retesting prior highs at 1.1340-1.1350 can easily fulfill the outstanding third higher close requirement.
Gold Jun Contract (GC, ETF: (GLD))
Intraday pressure back down to 1175.00 support Wednesday was relieved by the FOMC news that triggered a surge back up to test 1188.00. Back under 1178.00 would accelerate the next downleg.
Silver Jul Contract (SI, ETF: (SLV))
The reaction up on Wednesday”s FOMC statement probed back into the 16.15-16.35 range to 16.25, which is still too shallow to signal a recovery underway..
30-year Treasury Jun Contract (US, ETF: (TLT))
Tuesday”s inside day under 151.25 was still a little too optimistic for consolidating the rally. That vulnerability was exploited by Wednesday”s FOMC statement for a reaction down to within 2 ticks of 149-16 support, which recovered back above 151-00. The reaction isn”t deep enough and the recovery isn”t high enough to be assured that sellers are done.
Crude Oil Jul Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Probing overnight well above 60.80 reacted down Wednesday under the 60.30 pullback limit, attacking 58.75. Recovering stopped a few dimes short of 60.30.
Natural Gas Jul Contract (NG, ETF: (UNG, UNL))
Probing fresh highs at 2.95 reacted down intraday Wednesday to close under prior highs. But not under a prior low, greeting Thursday”s EIA report from a position of strength. The rally is likely to extend so long as pullbacks now hold 2.83 as support.